The Role of CMOs in the Evolving Landscape of Publishing
By: Frank Bilotto and Paul Gerbino
Are publishers and other content creators walking away from money if they do not work with Collective Management Organizations (CMOs)? Along with walking away from money, are they also not protecting their copyright?
We address the role of these regional rights organizations with the acronym CMO which may confuse you because, like me, I think of Chief Marketing Officer. Collective Management Organizations (CMOs) are a critical part of the content licensing landscape and we address many questions publishers have about CMOs.
This article was inspired by my participation in a panel discussion on Collective Licensing. I felt compelled to create my own panel with Frank Bilotto, head of Business and Legal Affairs for Creative Licensing International. We delve deep into the role of Collective Management Organizations (CMOs) in the evolving publishing landscape and how knowing more about CMOs will help you make decisions that best aligns with your business needs.
Hope you enjoy!
(FYI, I will now refer to CMOs and I am not referring to marketing)
(We would like to thank Andrew Hughes, Secretary General at PDLN, for the question ideas.)
What Is The Role of CMOs in the Evolving Landscape of Publishing?
Paul Gerbino: CMOs, formerly known as Reproduction Rights Organizations (RROs), have long acted as intermediaries between rights holders and users, facilitating the licensing and distribution of copyrighted works. However, as the digital landscape evolves, CMOs face increasing challenges in ensuring transparency, efficiency, and fairness in their operations.
Frank Bilotto: CMO’s are uniquely positioned to be the intermediaries of the future between publishers and users for any new technology that is developed for the dissemination of content. Consider how many R&D departments of companies that license content are developing their own AI tools to not only mine and organize the content, but also to generate new content. CMO’s could be expanding their relationships with publishers to include this type of reproduction. The Copyright Clearance Center (CCC) has already begun its attempt to control this space.
What Are The Challenges and Opportunities for CMOs?
Paul Gerbino: One of the primary areas where CMOs often fall short is in their reporting practices. Publishers frequently express frustration with the lack of clarity and transparency surrounding royalty calculations and distribution processes. This perception of a “black box” can erode trust and hinder collaboration. To address this issue, CMOs must prioritize clear communication and provide detailed reports that explain how royalties are calculated and distributed.
Frank Bilotto: If CMO’s were transparent in reporting to and paying publishers, their opportunities would be limitless, but few of any publishers trust them. CCC uses obsolete and highly subjective surveys of customers to determine how to pay its publishers and I’m not sure if anyone can correctly calculate how MMO’s use content. However, there is a technology that existed for 10 years that could solve every potential problem in this space instantly. Blockchain. In real time, blockchain technology can track usage and pay royalties. Unfortunately, I think we’re at least 10 years away from implementation, because there is not enough organized push by publishers to effect a change in the way aggregators and CMO’s do business.
What are Criteria for Choosing a CMO?
Paul Gerbino: Publishers should have specific criteria when choosing which CMO to work with. International reach, supplementary services like anti-piracy, and public disclosure of represented publishers are all factors that should be evaluated. CMOs that can meet some or all of these criteria are more likely to attract and retain publishers.
Frank Bilotto: Find one that is the most transparent in reporting and payment. Check with publishers in your space for referrals.
How Can CMOs Build Trust and Collaboration Among Its Member Publishers?
Paul Gerbino: Building trust between publishers and CMOs is essential for the long-term success of both parties. Transparency in reporting, clear performance indicators, and benchmarking against industry standards can help establish credibility and foster a collaborative environment.
Frank Bilotto: Transparency in everything, not only calculation and reporting, but in how much revenue they generate and how much of it is paid to publishers.
What Is The Market Coverage Of A CMO?
Paul Gerbino: Contrary to the belief that CMOs are only suited for smaller, fragmented markets, these organizations can play a valuable role in representing rights holders in diverse geographies. With their international networks and partnerships, CMOs can effectively navigate complex licensing landscapes and ensure that rights holders receive fair compensation in various markets.
Frank Bilotto: I’m not sure of the total market coverage of CMO’s, but until every publisher and every licensee of content is partnering with at least one CMO, the potential market is greater than it currently is.
What Is The Impact of AI on CMOs?
Paul Gerbino: The emergence of artificial intelligence (AI) presents both opportunities and challenges for CMOs. AI developers often prefer to deal with a single entity for licensing purposes, making CMOs well-positioned to streamline the process. By establishing clear licensing terms, efficiently collecting royalties, and monitoring AI usage, CMOs can contribute to ethical and responsible AI development.
Frank Bilotto: CMO’s can be, in fact, should be, the essential component for publishers to be fairly compensated by AI technologies using their content. I can’t imagine any AI technology executing licensing agreements with thousands of publishers individually. Dealing with a handful of CMO’s makes it likely and easy that AI technologies will attempt to play fairly. Additionally, partnering with a CMO gives publishers access to AI technologies that wouldn’t negotiate individually with the small and mid-size publishers.
Should Publishers Consider Direct Or Collective Licensing?
Paul Gerbino: The question of direct versus collective licensing is a complex one. While there are arguments for both approaches, a lot will depend on the size and reach of the publisher. In a recent webinar, Alice Ting broke down publishing into three categories, large, medium and small. According to Alice on the Direct vs. collective question:
- Small publishers probably would benefit from a collective
- Medium sized publishers could benefit from collective as long as there are carve- outs in how the deal is done
- Large publishers may join collectives if they only give collectives a narrow mandate
Now, there was much more to that answer from Alice but I will keep it short for now.
Where CMOs can be particularly effective is in managing complex rights, representing large-scale users, and supporting rights holders with limited resources.
Frank Bilotto: Unless you’re one of the top 50 publishers in the world, you’re naive if you’re going it alone. It’s that simple.
What Are The Economic Benefits of Collective Licensing?
Paul Gerbino: The economic arguments for collective licensing are compelling. By representing multiple rights holders, CMOs can negotiate better terms with users, reduce transaction costs, and ensure fair compensation for rights holders. Additionally, collective licensing can promote market stability, reduce legal risks for users, and facilitate collaboration between rights holders and users.
Frank Bilotto: Classic example of the whole is greater than the sum of its parts. Royalty rates are the direct result of the monetary value the publisher brings to the table. So, I can assure you that if 10 publishers are each generating $100k per year for an aggregator, each publisher’s royalty rate is going to be significantly less than what a CMO can negotiate for a consortium of those 10 publishers. The difference in the royalty rate may be as much as 150% more. So, a mid-size publisher that might negotiate a 20% royalty acting alone, is likely to enjoy a 50% royalty if it is part of a group of publishers represented by a CMO.
How Does Competition Law Impact CMOs?
Paul Gerbino: Competition law, particularly antitrust laws, poses a significant factor in the CMO landscape. While antitrust laws can pose challenges, innovative approaches, such as the Australian Competition and Consumer Commission’s code of conduct, can help address concerns and promote fair practices.
Frank Bilotto: Competition Law prohibits any agreement that prevents, restricts or distorts competition. On one hand almost every licensing agreement does just that. On the other hand, it’s a real stretch to apply Competition Law to publishing and licensing in this context.
So What Is The Conclusion Of All This?
Paul Gerbino: CMOs have a critical role to play in the digital age. By prioritizing transparency, efficiency, and fairness, CMOs can build trust with publishers, navigate complex licensing landscapes, and contribute to the sustainable development of the creative industries. As the digital landscape continues to evolve, CMOs must adapt their strategies and embrace new technologies to ensure their continued relevance and success.
Frank Bilotto: If you’re a publisher and you want to earn more money and prevent unauthorized use of your content, partner with a CMO you can trust ASAP.
Frank Bilotto is a licensed attorney with over 25 years of experience in commercializing intellectual property. He was instrumental in creating The World Reporter in 1999, an alliance of 10,000 daily newspapers, and the first such content alliance in the digital content space. He’s negotiated more than 1,000 intellectual property licenses with the world’s largest organizations, including Comcast, Google, BBC, NewsCorp, Gannett, ESPN, NBC, CBS, ATT, Dow Jones, Thomson Reuters, Facebook, Microsoft, Nike, Adidas, Hewlett Packard, Knight Ridder, Capitol Records, MGM and Paramount. Frank’s passion outside of content licensing is trying to love his neighbor as himself. (Unfortunately, he fails too often.)
Paul Gerbino is the President of Creative Licensing International. He is an expert in digital, content strategy, licensing, product development, advertising, and copyright protections. His expertise is noted with an exemplary track record of transforming low-performing projects into highly profitable revenue streams. Evident in creating and launching innovative digital media products and advertising programs for B2B, B2C, STM, and academic publishers. Paul is passionate about helping publishers improve their performance, productivity, and profitability in the evolving digital landscape.
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